"It's Not the Time to Buy Dollars but to Sell... Realizing Foreign Exchange Gains"

Won-Dollar Exchange Rate Hits New High Daily
Individuals and Companies with Foreign Currency Deposits Gain from FX Arbitrage

Four Major Banks' Foreign Currency Deposits Decrease from $52.6 Billion in July to $50.893 Billion in September

Exchanging Won to Dollars at Current Rates for FX Gains Carries Risks

[Image source=Yonhap News]

[Asia Economy Reporter Sim Nayoung] As the KRW-USD exchange rate hits new highs almost daily, individuals and companies who invested in foreign currency deposits are cashing in on forex gains. With the exchange rate rising close to 1,400 KRW per dollar, the sentiment of "sell before it drops again" seems to have taken hold. On the 7th, the KRW-USD exchange rate recorded 1,385.5 KRW.

The dollar deposit balance at the four major banks (KB Kookmin, Shinhan, Woori, Hana) stood at 50.893 billion USD as of the 6th. Foreign currency deposits at these four banks have been declining for two months. From 52.658 billion USD at the end of July, it fell to 51.345 billion USD by the end of August, and then decreased by an additional 452 million USD in just six days as the exchange rate repeatedly hit new highs. Only NH Nonghyup’s foreign currency deposits increased by about 600 million USD over two months, which was due to attracting foreign currency deposits from several institutions.

Experts also say there is room for further exchange rate increases, but now is the time to sell dollars, not buy. Jung Sungjin, Deputy Head of KB Kookmin Bank Gangnam Star PB Center, said, "I believe the KRW-USD exchange rate could rise to 1,400 KRW, but from now on, it is advisable to start realizing gains on foreign currency deposits. For those who already hold dollars, it’s okay to consider foreign currency deposits even now, but exchanging KRW for dollars at this point to expect forex gains carries risks."

On the 7th, when the won-dollar exchange rate surpassed 1,380 won for the first time in 13 years and 5 months, dealers were working in the dealing room of Hana Bank in Euljiro, Seoul. Photo by Moon Honam munonam@

The KRW-USD exchange rate started at 1,191.8 KRW on January 3 this year and is now approaching 1,400 KRW. A representative from a commercial bank said, "In August, the exchange rate exceeded 1,340 KRW and was considered a peak, and in September, the exchange rate again became an issue. Each time, many companies and individuals realize forex gains. Export companies sensitive to exchange rates must sell once the rate reaches an internally set threshold, so when the exchange rate rises, the foreign currency deposit balances at banks decrease," he explained.

The high volatility of the exchange rate is another factor that dollar deposit investors should be aware of. Oh Hyunhee, a researcher at Hana Financial Research Institute, said, "The difference between the yearly low and high of the KRW-USD exchange rate this year is the largest since the financial crisis. Risks from yuan weakness, export slowdown, and volatility due to the European Central Bank (ECB) policy meetings will continue."

Meanwhile, total foreign currency deposits including the dollar, yuan, yen, and euro are also on a declining trend. At the end of July, the four major banks’ foreign currency deposit balance peaked at 64.537 billion USD, then fell to 63.064 billion USD by the end of August, and further decreased to 62.146 billion USD as of the 6th of this month.

This content was produced with the assistance of AI translation services.